Cost overruns lead to reforms

11/06/2009 - 00:00

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SIX months after initiating an overhaul of the construction and management of state government buildings, Treasurer Troy Buswell has unveiled details of the reforms to Western Australia's building and construction stakeholders.

Cost overruns lead to reforms
Property

SIX months after initiating an overhaul of the construction and management of state government buildings, Treasurer Troy Buswell has unveiled details of the reforms to Western Australia's building and construction stakeholders.

Mr Buswell said initiatives outlined in the 'Works Reform Business Solution Plan', which comprises part of the 'State Asset Investment Program 2009-2013', aimed to ensure that existing buildings were maintained and that new projects were delivered on time and on budget.

From a sample of 17 of the state's major infrastructure projects - ranging from the Fiona Stanley Hospital through to the West Kimberley Regional Prison - seven had a cost blowout of more than 100 per cent.

Costs on four of those seven projects blew out by more than 200 per cent, including for the Albany Entertainment Centre, which has increased in cost by 400 per cent since the project received approval.

"The state has had challenges in the past in terms of delivery of projects on time and on budget - I would go so far as to say that the government in that area, particularly as it relates to new buildings, has been poor," Mr Buswell told the presentation.

"There is a long list of projects which have seen significant time and cost blowouts."

But Mr Buswell was quick to reassure those potential private sector partners seated in the audience that he wasn't pointing the finger at them, especially considering a greater focus on public-private partnerships (PPPs) is a key initiative of the reform plan.

"I don't say that to be critical of any of the private sector partners who were involved in that process; there were a number of complex factors that combined together to deliver those poor results," he said.

Instead, Mr Buswell suggested there was a culture of understating costs and delivery times that had developed within the bureaucracy.

"There has developed a culture in government that says that understating projects costs and delivery times at the business case stage is a perfectly acceptable way to do business, with an expectation that once your project is approved budget increases and time extensions during both project definition and procurement stages will be automatically approved," Mr Buswell said.

"That has proved to be the case in the past and it is an unacceptable situation and it won't continue. We've focused on developing a new culture."

An important aspect of the reform plan included new forms of procurement, which Mr Buswell described as moving away from the traditional 'construct only' approach (used almost exclusively in the past for the delivery of government buildings) and towards enhancing the use of PPPs.

"Fundametal to that reform is our capacity to engage with the private sector in the provision of public social and public economic infrastructure," Mr Buswell said.

Other initiatives of the reform plan include better planning by government agencies, which will be required to provide a 10-year strategic asset plan on an annual basis to the Department of Treasury and Finance.

Also highlighted is a greater focus and emphasis around design standards, headed by newly appointed government architect, Steve Woodland.

The role of the Office of Strategic Projects will be enhanced so it will to better manage projects across the entire asset investment program, while an improvement to the management of the existing portfolio of 4,000 government buildings is hoped for via a whole-of-government approach to the planning of building maintenance.



Mr Buswell was adamant the reforms would put an end to massive blowouts in projects seen under the previous government.

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